The last several weeks have seen palpable progress in efforts to strengthen New York’s auto-insurance fraud laws.
First, with a push from Gov. Cuomo, a new regulation is being finalized to give the Department of Financial Services the authority to boot sleazy medical providers from the no-fault system if they’re convicted of auto-insurance crimes. The reg implements an earlier law giving the department this authority.
Then the state Senate gave legislative efforts a trifecta. That chamber passed three bills that have been on the docket for several years.
First is the so-called Alice Ross Law. The proposal would make it a specific crime to stage auto crashes. The bill memorializes Alice, a grandmother who was killed in Queens when she was targeted by a botched staged crash.
Second is a bill making it a crime to be a runner (or recruiter) for staged-crash rings. Hiring a runner to solicit motorists for fake crash-injury claims against auto insurers also would be a specific crime.
Third is a bill allowing insurers to rescind an auto policy if the premium check bounces. Crash rings often buy a policy with checks from empty bank accounts, then quickly stage crashes before the bounced check has time to return to the auto insurer.
These bills all target staged-crash rings that are prevalent throughout the Empire State. The proposed decertifying reg and three bills create a strong, coordinated effort to take down these crime rings that are raising premiums for honest New Yorkers.
The Coalition strongly supports these measures. “Providers who are ripping off the auto insurance system tend to make their living from the system. So, decertification will have a solid effect on fighting fraud in New York,” the Coalition wrote in a Letter to the Editor published in the Legislative Gazette this week.
We need the governor and superintendent of financial services to get four-square behind these bills and work to push them through the Assembly this year. That will be a great coup if these three bills become law after several years of persistent, sometimes frustrating but always committed efforts by the anti-fraud community.
Some PIP medical clinics in Florida aren’t waiting for the governor to sign the reform bill the legislature enacted two weeks ago. They see the writing on the wall and are putting their clinics up for sale.
The for-sale signs likely have been spurred by one of the most effective provisions of the new law — a limit on the $10,000 per-patient slush fund chiropractors and attorneys have used to bilk the PIP system. Now, only $2,500 of the $10,000 benefit can be used for chiropractic care unless the patient has a specific referral from a physician. That should put a huge dent in the profits of PIP mills that over-treat or don’t treat at all. Yet, it allows for a patient who is legitimately injured and in need of chiropractic care to receive adequate treatment.
The final bill that emerged from starkly different versions offered by the Florida House and Senate seems like a good compromise. Insurers didn’t get all they wanted, such as a requirement that claimants seek treatment exclusively from hospital emergency rooms or caps on attorney fees. Consumer groups and plaintiff attorneys pushed a provision to require a 25-percent reduction in PIP premiums. But that didn’t make into the final bill either.
What did make it in the final bill — tighter clinic licensing, fraud warnings on clinic applications, ability for insurers to conduct EUOs and expanded crash reports — should help to curb fraud and put downward pressure on auto premiums. It’s also interesting that these same provisions all were included in a bill last year that was initiated by the broad-based coalition Sunshine Alliance to Erase Fraud (SAEF). But that initiative ultimately was squeezed out by a more-aggressive proposal insurers championed to cap attorney fees, which the trial bar killed in the last week of the 2011 session.
The failure in 2011 left many pessimistic about chances for this year. However, the momentum from 2011 carried over. Legislators faced more pressure to act this time around, plus the governor wisely chose to make auto reform a signature initiative. Worthwhile legislation rarely gets enacted in a single legislative session.
So while the players in the legislative arena — insurers, consumer leaders, lawyers, docs and law enforcement — all started from different positions in 2012, they basically ended up in the same place from 2011. And that’s a good path. Everyone should feel good that the legislative process worked. Well, perhaps not everyone. Legitimate clinic owners and workers who relied exclusively on PIP business have to shift to a new business model. And as for the shady clinics, hopefully they are looking for a totally new line of work.
The recent bust of 36 alleged fraud members in New York has been called the largest no-fault fraud in history by prosecutors. In recent weeks, record-breaking fraud rings have been dismantled in several key states across the country.
What is alarming is the growing size of these alleged operations. The ambulance-chasing crash ring in New York is charged with seeking $279 million. Texas doctor Jacques Roy is charged with orchestrating a $375-million operation. In February, an assistant administrator of another hospital pled guilty to cooperating in a $116 million scheme.
These cases are of an entirely different nature from what was common immediately after the economic downturn. Namely, individual consumers driven by financial stress making bad decisions to torch a car to use insurance money as a bailout.
More of the cases we are seeing of late involve fraud as a way of life. Masterminded rings, run much like businesses, are seeking to bilk insurers and consumers as large corporate entities.
The NICB reports a 19-percent rise in questionable claims since 2009. How much money are each of these questionable claims raking in? The Coalition estimates that fraud costs $80 billion a year. If insurance fraud was a company, it would rank number 25 among the Fortune 500, above Apple, Google, Costco, and Pfizer. Either fraud is becoming more corporatized, or investigators are busting large rings that have been developing these tactics for some time now.
Regardless, insurance fraud can be a lucrative business, as these recent cases show… And it’s a business that does harm, especially to law-abiding citizens. Consumers must learn the signs of fraud to protect themselves from getting fleeced on the road and at home.
The author is communications specialist for the Coalition Against Insurance Fraud.